Recently the federal government announced that certain provisions of the Affordable Care Act would no longer apply to U.S. territories — most specifically the requirement that insurance companies must offer coverage to all individuals. The decision related to the Public Health Service Act’s definition of the word “state.” Under the PHSA, the provisions of the health care law only apply to states, and territories are exempt.
For months, U.S. territories have grappled over the provisions of the ACA and how it applied to them. Previously, the law was read to require insurers to provide health insurance coverage to all residents, regardless of previous conditions, but did not impose a mandate on all residents to purchase insurance. This resulted in a larger percentage of unhealthy individuals buying policies, thereby increasing costs for insurance companies that rely on healthy individuals’ premiums to offset the cost.
Now, with the new reading of the ACA, insurance companies are no longer obligated to offer coverage to all residents of the territories and could discriminate against individuals based on their health, a practice the ACA was meant to curb. This means that insurance rates for unhealthy individuals will likely go up. Whereas previously people could purchase identical policies regardless of health, insurers may now bar certain individuals from purchasing policies and are exempt from providing fair health premiums.
Insurers also no longer must offer certain services, such as essential health benefits, another mandate of the ACA. This includes ambulatory services, emergency services, maternity and newborn care, hospitalization, mental health and addiction services and prescription drugs.
Certain provisions of the ACA will still apply to insurance companies in the U.S. territories, including the disallowance of bans on annual or lifetime benefits. Additionally, insurers must provide coverage for preventative care. The changes will go into effect over the next several months, although insurance companies do not have to repay any grant funds that have already been spent. All unspent grant money must be returned.
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